LLOYDS BANKING GROUP
RESULTS FOR THE FULL YEAR
“2021 has been a year of solid financial performance with successful strategic execution, ongoing investment and continued franchise growth. This has enabled the Group to deliver on its customer focused ambitions, as set out in Strategic Review 2021, as well as on Helping Britain Recover during the pandemic. It has also enabled the Group to offer high levels of capital return to our shareholders.
Building on our strong foundations, our purpose of Helping Britain Prosper forms the basis of our new strategy to profitably deliver for all of our stakeholders. We will look to deepen relationships with our existing customers, both consumers and businesses of all sizes, and meet more of their financial needs by making our great products more relevant to them and our channels simpler and more personalised to use. This will set the Group on a higher growth trajectory with more diversified revenue streams, while we retain our strong focus on cost and capital discipline. Enabled by maximising the potential of our dedicated people, technology and data capabilities, our strategy represents an exciting new chapter for Lloyds Banking Group.
I am confident that the Group's purpose, customer focus, unique business model and significant competitive strengths, embodied in our ambitious strategy will ensure the Group is able to deliver higher, more sustainable long-term returns and capital generation for our shareholders, whilst meeting the needs of broader stakeholders.”
Charlie Nunn
Group Chief Executive
We are Helping Britain Recover with strong progress made under Strategic Review 2021
• Strong performance against Helping Britain Recover commitments, including lending more than £16 billion to over 80,000 first-time homebuyers (target: £10 billion), supporting over 93,000 start-ups and small businesses1 with online support, business advice and business banking accounts (target: 75,000) and expanding the funding available under the Group's discounted green finance initiatives from £3 billion to £5 billion
• Significant progress against our customer focused commitments, including maintaining the Group's record all-channel net promoter score of 69 and increasing net new open book Assets under Administration (AuA) in Insurance and Wealth by over £7 billion
• Continuing to enhance the Group's digital capabilities, with mobile app releases nearly double that of prior year and a three-fold increase in corporate clients onboarded to the Group's new cash management and payments platform
Solid financial performance with continued business momentum
• Statutory profit before tax of £6.9 billion and statutory profit after tax of £5.9 billion, benefitting from higher income and a net impairment credit. Tangible net asset value per share of 57.5 pence, up 5.2 pence per share
• Solid net income of £15.8 billion, up 9 per cent, with underlying net interest income of £11.2 billion, up 4 per cent, underlying other income of £5.1 billion, up 12 per cent and a reduction in operating lease depreciation. Underlying net interest income benefitted from increased average interest-earning banking assets, up 2 per cent and a strengthened banking net interest margin of 2.54 per cent
• Sustained cost discipline with operating costs of £7.6 billion, up 1 per cent compared to the prior year, including the impact of rebuilding variable pay. Remediation charges of £1,300 million, with £775 million in the fourth quarter, including £600 million in the quarter for HBOS Reading
• Asset quality remains strong. Net underlying impairment credit of £1.2 billion, including a net credit of £467 million in the fourth quarter, benefitting from improvements to the macroeconomic outlook for the UK, combined with robust observed credit performance
Balance sheet and capital strength further enhanced
• Loans and advances to customers at £448.6 billion, up £8.4 billion versus prior year, driven by strong growth in the open mortgage book (up £16.0 billion in the year to £293.3 billion)
• Customer deposits up £25.6 billion to £476.3 billion, with Retail current accounts up 14 per cent to £111.5 billion
• Loan to deposit ratio of 94 per cent, providing robust funding and liquidity; significant potential to lend into recovery
• Strong pro forma capital build of 210 basis points, with 51 basis points in the fourth quarter. CET1 ratio of 16.3 per cent (pro forma2), remaining ahead of the ongoing target of c.12.5 per cent, plus a management buffer of c.1 per cent
• Board has recommended a final ordinary dividend of 1.33 pence per share, resulting in a total ordinary dividend for 2021 of 2.00 pence per share, in line with the Group's progressive and sustainable ordinary dividend policy. The Board has also announced its intention to implement an ordinary share buyback programme of up to £2.0 billion, given the strong capital position of the Group
2022 guidance
Based on our current macroeconomic assumptions and the Group's new strategy, for 2022 the Group now expects:
• Banking net interest margin above 260 basis points
• Operating costs of c.£8.8 billion on the new basis, with the increase from the 2021 equivalent (£8.3 billion) reflecting stable business-as-usual costs, incremental investment and new businesses3
• Asset quality ratio to be c.20 basis points
• Return on tangible equity of c.10 per cent
• Risk-weighted assets at the end of 2022 to be c.£210 billion